Ibovespa Declines With Petrobras as Recent Gains Seen Excessive

The Ibovespa fell from a four-month high on speculation that gains spurred by an erosion in political support for President Dilma Rousseff may have been excessive.

State-controlled oil producer Petroleo Brasileiro SA contributed the most to the benchmark equity gauge’s drop. Vale SA gained along with raw-material prices.

The Ibovespa fell 1 percent to 51,629.07 at the close of trading in Sao Paulo. The real strengthened 0.7 percent to 2.2035 per U.S. dollar at 5:20 p.m. local time. Petrobras, as Petroleo Brasileiro is known, slumped 2.9 percent to 15.99 reais after jumping 6.6 percent yesterday.

“Petrobras was one of the stocks that rose the most these past days on bets that Rousseff is going to lose the election in October, and that a new government could improve the state-run company’s management,” Fernando Goes, an analyst at the brokerage firm Clear Corretora, said by phone from Sao Paulo. “But that seems to have been too much, considering that Rousseff still tops the rankings on vote-intention polls.”

Support for Rousseff fell to 38 percent from 44 percent in February in a Datafolha poll released on April 5 that pitted her against opposition candidates Aecio Neves and Eduardo Campos. She still had more than the level of backing a candidate would need to win the first round of voting.

Commodities Gains

The Ibovespa earlier today climbed as much as 2.4 percent as commodities prices rose amid speculation China will take further steps to increase economic growth, boosting the outlook for Brazilian exports.

The Standard & Poor’s GSCI index of 24 raw materials climbed 1.3 percent. Commodities producers account for about one-third of the Ibovespa’s weighting. Vale, the second-heaviest-weighted stock on the benchmark, rose 0.1 percent to 30.08 reais after gaining as much as 2.8 percent. The MSCI Brazil/Materials Index advanced 0.4 percent to a three-month high.

The Ibovespa entered a bear market March 14 after falling 20 percent from its October high through that day. The gauge has since gained 15 percent as state-owned companies including Centrais Eletricas Brasileiras SA rebounded.

Trading volume of stocks in Sao Paulo was 10.69 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.55 billion reais this year, according to data from the exchange.